Norway's biggest bank DNB raises dividend after strong quarter

OSLO (Reuters) - DNB DNB.OL, Norway's biggest bank, said on Thursday it would raise its dividend and buy back more shares as it reported stronger than expected fourth-quarter results, sending its shares higher.

FILE PHOTO: People walk past DNB bank branch in Stavanger, Norway December 5, 2019. REUTERS/Ints Kalnins/File Photo

Norway, where DNB generates more than 80% of its revenues, has had a surge in corporate investment in 2019 on the back of high spending in the oil and gas industry, supporting growth in the bank’s loan portfolio.

Chief Executive Kjerstin Braathen said that while the Norwegian economy was still expected to grow in 2020, the pace of growth was set to slow down compared with last year.

“We expect the level of investments not to grow as quickly in 2020,” she told a news conference, adding that the oil industry would be likely to see a small drop and thus act as a drag on GDP growth.

DNB reported net profit of 5.9 billion Norwegian crowns for the October-December period, down from 6.9 billion a year earlier, beating the average forecast of 5.30 billion.

J.P. Morgan Cazenove analysts said the forecast-beating income was driven by better than expected revenues and lower than expected loan losses.

DNB's shares were up 4.6% by 1035 GMT, outperforming a 0.4% rise in the Oslo Stock Exchange index .OSEBX.

The bank proposed to raise its dividend to 9 Norwegian crowns ($0.9802) per share, up 0.75 crown from a year earlier, and above the 8.84 crowns per share which analysts in a Refinitiv poll on average had expected.

DNB also increased its share buyback program to 2.0% of its overall stock from 1.5% previously. The bank has so far bought 10.7 million shares on the open market, and now aims to buy a further 10.2 million shares, it said.

Net interest income, a key measure of recurring revenue, rose to 10.3 billion crowns from 9.6 billion a year ago, beating an average forecast of 10.1 billion.

DNB’s net impairment on financial instruments declined to 178 million crowns in the quarter, 57 million crowns lower than in the fourth quarter of 2018 and more than 1 billion crownslower than in the third quarter of 2019.

“We have seen in all the other (Nordic) banks - SEB, Swedbank, Nordea - that impairments have been higher quarter over quarter, while DNB’s were lower,” said Jan Erik Gjerland, analyst at ABG Sundal Collier.

Reporting by Terje Solsvik and Victoria Klesty, editing by Gwladys Fouche and Jane Merriman